Note: This post has been amended (see the end) to include information requested by an overwhelming number of the readers. Thanks for your interest!
I am frequently asked, "What can I do to improve my chances of getting hired as a research analyst?" Beyond the obvious — become a CFA charterholder — there are a number of other steps that aspiring analysts may take.
Making the Intangible Tangible
What an aspiring analyst has to offer to an employer are largely abstract- and creative-thinking skills. These skills are intangible and difficult for recruiters to assess. This is one reason why firms in finance tend to recruit from the same schools decade after decade: rigor of the curriculum and reliably high quality candidates. This is also why those without experience in the investment industry find it hard to get hired for research analyst positions. That is, in the absence of other evidence, firms hire what they think they can depend on — that is, what is tangible: your education and your experience.
But do not despair if you have not gone to your country's top educational institution or if you have no experience! I went to the University of Colorado (not a top school for finance recruiters) and had very little experience when I was hired as a research analyst at one of the largest and best-known US money managers.
What employers really want is for your intangible skills to be made tangible. This realization empowers you tremendously, because with this framework, you can focus on providing concrete evidence that you have the skills necessary for being an effective analyst. When I began my career I created a personal website that included: examples of my own personal research analysis on companies; book reviews of economics, finance, and investment texts that demonstrated my ability to think critically about information; and an extended version of my CV (i.e., greater than the orthodox one-page maximum), so human resources departments could see if I had what it took to be a research analyst.
By engaging in these activities it will also sharpen your own skill set. For example, when I created my own research reports — which I highly encourage you to do — I used only primary data sources, such as company annual reports. I also did all of my own calculations for things like future gross domestic product (GDP), the future shape of the yield curve, and the cost of capital.
Recognize that your opinion matters. Companies will be hiring you for your opinion as much as for your skill set. They hire you with the expectation that you will take responsibility for your choices. So, if you choose to make your intangible skills tangible by creating your own research reports then you must track how your investment recommendations do by noting the prices of assets on the day that you recommended them for purchase and then track how they perform over time. You must be honest with yourself, otherwise you won't learn anything. This is more for you than for your future employer. (Though it certainly wouldn't look good for you to get caught fudging the numbers in even a theoretical exercise.) Markets provide a valuable feedback mechanism for assessing your skill set. The beautiful and terrifying thing about investment management is that the results of your performance are measured objectively. You either did well for people or you did not. So, if you are not doing very well, then you need to identify where your analysis broke down, and then strive to improve.
I have a friend who took a similar approach as me to getting work. He sent his research reports to investment firms every single month for two years and eventually got a job interview. By doing this process he taught himself to be an analyst.
Look for a Mentor
Across the globe, CFA Institute has scores of local societies, which are made up of many generous individuals, many of whom may be willing to guide your career track. If that does not appeal, then contact money managers whose process is in alignment with your own. You may be intimidated, but the worst they can say is "no." In any case, any possible anxiety you experience in approaching investment heroes is good practice for the anxiety you may experience in approaching management of prospective businesses, some of whom may include the likes of Rupert Murdoch or Li Ka-Shing.
Analysis Is Probably Not What You Think It Is
Most analysts — the aspiring and the experienced — think that investing is about facts, models, mathematics, and analysis. Yet, as I discuss extensively in my own book, The Intuitive Investor, there is no such thing as a future fact. Facts, by definition, are things that occurred in the past. Yet investing results unfold in the future. What this means is that investing is as much a creative and intuitive process as it is an analytical process. To be a well-rounded and experienced candidate you need to be able to think in a balanced fashion — that is, both analytically and creatively. Therefore, engage in activities that enhance your creativity, too. For me, I am an active meditator, as well as an artist. Your success as an analyst will depend on your ability to synthesize information and to see things no one else is seeing. After all, by definition, if you want to earn returns that no one else is earning, you have to do things that no one else is doing.
Stock Your Mental Toolkit
Another tip is to read, read, read, read. Read investment texts. Read texts on geopolitics. Read texts on mergers and acquisitions. Read economic texts. Read anything that sparks your curiosity, even fiction (potent advice from Tom Brakke, CFA). And most of all, read the news, from many sources every single day, and begin to develop an opinion about the news and how it affects different countries, industries, businesses, and individuals. The most important skill for any investor is: understanding information. He who understands information the best does better, and he who understands information the best and acts decisively on that information wins the day. When I was an aspiring analyst if I encountered a piece of news I did not understand, I would read not just the article in question, but also an entire academic paper or book on the subject. I did this day after day, month after month, and year after year until my mental mosaic became large.
So let your ignorance guide you. What you do not know and understand should inform what you try and learn next.
Introspection
Spend some time figuring out who you are as an analyst. This is critically important. Why? If your natural strengths as a thinker make you a good trader, then you will be very frustrated working at a deep value, long-term focused money management firm. Likewise, if your character is more in line with a long-term, deliberate process, then you will likely be frustrated at a high-frequency trading (HFT) shop. You want to know yourself so that you can make an informed decision about where you want to work, about what type of analysis works in accord with your mind, and about where to spend huge parts of your life.
Furthermore, your introspective process will allow you to take an inventory of your innate strengths and weaknesses — and we all have both. You want to develop skills that accentuate your existing talents and skills that compensate for your shortcomings, too.
Be Patient
Expect this entire process to take a lot of time. From the time I first had the idea to become a research analyst to the time I got hired doing the work I wanted to do, it took me five years. For some people it is a much shorter process. But then, having done all of the work I described above, once hired, I was promoted to portfolio manager in two short years and was fortunate enough (and maybe skilled enough) to have retired at age 35.
Best wishes for success!
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Update: Many of you in the comments section have requested a link to an example research report. When I began my career I got a copy of a brokerage report from my local market and then used it as the basis for my own report. I am going to point those interested in what a research report looks like to Zacks.com.
All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
Image credit: ©Getty Images/TommL
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If you liked this post, don’t forget to subscribe to the Enterprising Investor.
All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer. Image credit: ©Getty Images / Ascent / PKS Media Inc.
Professional Learning for CFA Institute Members
CFA Institute members are empowered to self-determine and self-report professional learning (PL) credits earned, including content on Enterprising Investor. Members can record credits easily using their online PL tracker.
410 Comments
Hello Jason,
Thank you so much for your valuable suggestion. You have been simply outstanding to reach out to have best suggestions & so I will in the future as well.
With Smiles,
Ravi Kumar
Hi Jason
The above article is mind blowing, this has made me read and learn more about becoming an equity analyst , in turn i realized my dream to become analyst.
As i am 27 of age can u tell me how many years will take a person to complete CFA? to become an equity analyst is it necessary for a person to do CFA or just an MBA finance would do good.
As i understood a person to become an analyst he needs to be well versed in Bond Valuation and Security Analysis and know few models like BOTP etc...
Kindly let me know which are the good websites or books require to refer for the above mentioned topics it will be of great help.
Hi Jason
I am so happy to have found your blog¡
I am 26 years old. I have audit comercial experience in one of the Big 4. Now, I am interested to become a financial analyst. The think is that I feel lost. I do not where to start. I am thinking to take a MSc in Investment and Finance in Queen Mary U London.
What should I do first?
Look forward to hearing from you.
Regards,
Laritza
Hello Laritza,
I believe the place to start is to examine why you want to be a financial analyst. The next thing to do is to spend a long time thinking about what type of an investor you are. Once you have deeply felt, inspired opinions about what kind of an investor you are it will help shape your future. One you know what type of an investor you are then you need to spend time researching the aptitudes and skill sets that investors of that kind possess. Then compare that to your inventory of skills. If you have gaps in your knowledge then you need to fill them. After that you need to make these skills tangible for employers [in other words, then you can pick up at the start of this blog post : )].
Best wishes for success!
Jason
Hi Jason,
Amazing article, please accept my heartfelt gratitude for this piece and all the advice within! There couldn't have been a better time for me to come across this, especially since I am just starting my career in finance. I was a bit confused about the approach I should take to develop the skills required for research & analysis but this article certainly brought things into perspective.
I would be thankful if you could help me with a quick novice question -You have mentioned that when you started out, you used primary data sources like the 10k for the analysis. Could you please give me a few pointers on how you went through the the statements and any specific information bits you looked for in the report? Any blogs, books, articles, etc on this would be helpful too. I am currently trying to analyze a pharma company by going through its 10k and things get a bit confusing from time to time! I am an L2 candidate and have no experience with investment research, so my knowledge is very limited. It would be great to soak up any piece of info I can get my hands on at this point :)
Thanks again for the article and look forward to hear from you!
Kind regards,
Gaurang
Hello Gaurang,
How nice to read your kinds words. You have asked an important question. In the many answers to questions to this blog I listed my favorite finance books. In that list are several financial statement analysis books that are both excellent. That said, my very favorite is John Tracy's "How to Read a Financial Report." I believe you will love it.
Importantly, read more than one book because each time you discover the information through another author's eyes helps inculcate these teachings into memory.
Best wishes for success!
Yours, in service,
Jason
Dear Mr. Voss,
I will echo the sentiments of the previous comments—outstanding post! I am very glad to have stumbled onto your blog after countless Google searches of “How to Become a Research Analyst”. I am also very impressed with the dialog you maintain with your readers; over one year since your blog was first published and you still actively reply to the comments you receive. On behalf of everybody, thank you.
If I may, I’d like to give you a little background and then ask for your advice on my personal situation. I am a 25-year-old MBA graduate trying to break into the realm of equity research. My professional experience is comprised of 2 years of retail banking and 5 years of restaurant management. While I have no background in finance (at least on my resume), I have been a “student of the market” for over five years. I consistently follow the market news, maintain my own individual trading account, and I spend much of my spare time learning about and researching various companies for pure enjoyment.
After careful thought and consideration, I have decided to pursue a career that is aligned with my passion for equity research. I recently became a CFA Level I Candidate and will sit for the exam in June of 2015. I live an hour outside of New York City and that is where I intend to begin my new career. However, I am having a very difficult time getting the attention of Wall Street firms (both big and small). Unfortunately, I attained my degree from a small state school in New York and do not have a powerful alumni network I can leverage to help me break into the industry.
I fully intend to follow the advice you outlined in your post and comments. I am in the process of creating my own website to display my research work (“making the intangible tangible”). I also plan to join a local CFA society to continue building my professional network.
Here is my question. What would be the best use of my time while I am studying for the CFA exam(s) and building a name for myself on my own? Many of the entry-level Research Associate openings I find require “1-2 years of related experience”. How can I improve my resume and become more attractive to potential employers down the road? Is there another an area of work I should look into while I am going through the CFA curriculum that can provide me with valuable, relatable experience? How can I get my foot in the door?
If you’ve made it this far, thank you for reading. I am seeking all of the guidance and direction I can get. I just want to be sure I am on the right track and doing all I can to one day become a research analyst.
Thank you again for all you do.
Kind regards,
Joe
Hello Joe,
I have copied portions of your e-mail into my response so that I can answer your questions directly.
Regarding: "I will echo the sentiments...On behalf of everybody, thank you."
You are welcome, my pleasure. Having been through this process before I know that there are few resources to help people deep interest in becoming a research analyst.
Regarding: "If I may, I’d like to give you a little background and then ask for your advice on my personal situation. I am a 25-year-old MBA graduate trying to break into the realm of equity research. My professional experience is comprised of 2 years of retail banking and 5 years of restaurant management. While I have no background in finance (at least on my resume), I have been a “student of the market” for over five years. I consistently follow the market news, maintain my own individual trading account, and I spend much of my spare time learning about and researching various companies for pure enjoyment."
Your MBA gives you an advantage in the investment space. Most specifically, you can think like a businessperson when analyzing businesses. This is very important, because many analysts have no actual work experience so everything remains abstract and remote to their thinking. Therefore, they are gullible and vulnerable to sensation, rather than fact, when assessing a business and its prospects. This goes for your restaurant experience, too. I would utilize this experience and write up an overview of 'Top 10' things to consider when investing in a publicly traded restaurant chain. Something to that effect has a better chance of getting your foot in the door, so to speak.
You are smart to create your own website. This is the best platform for employers to learn more about you. If your returns beat a well known benchmark, such as the S&P 500, then I would use CFA Institute's GIPS standards to calculate your rate of return relative to a benchmark to demonstrate your aptitude for investing. You can put your rate of return on your website vs. the benchmark. Next, you want to say the paperwork to back up the returns is 'available upon request.' If you haven't beaten the benchmark (after at least two years of effort) then it may be a signal that you need to become more proficient at investment management.
Separately, you could provide commentary on news flow on your site to demonstrate your ability to comprehend the business ramifications of the news on your names.
Regarding: "After careful thought and consideration, I have decided to pursue a career that is aligned with my passion for equity research. I recently became a CFA Level I Candidate and will sit for the exam in June of 2015. I live an hour outside of New York City and that is where I intend to begin my new career. However, I am having a very difficult time getting the attention of Wall Street firms (both big and small). Unfortunately, I attained my degree from a small state school in New York and do not have a powerful alumni network I can leverage to help me break into the industry."
I am not surprised about the difficulty of getting people interested. This is normal. Most people, even those that graduate from Ivy League schools find the investment management industry a difficult one to enter. Your attitude needs to be: I can leave no investment stone unturned. Really, this must become an obsession. You have to be demonsrably different and good to break in. Not impossible by any means, but difficult. With the rock solid backstop of badassedness in place then your attitude needs to be: if they knew about me what I know about me, then they will have to hire me lest I get hired elsewhere and destroy them. Seriously. If you can say that honestly to yourself then the problem switches from one of 'do I have the goods' to 'how do I communicate that I have the goods.' This latter problem is one of communications and much easier to solve.
Website gives you platform and nexus point for all things Joe. If it is a communications game then your resume and cover letter have to be good enough, a) not to put down, and b) to leap from the resume and cover letter to your website, where you can engage in a more comprehensive conversation. This also means that the game become a numbers game. There are thousands of people working in the investment management industry globally, but they are respresented by a much smaller cadre of human resources departments. So it behooves you to send hard copies of things DIRECTLY to the investment managers and analysts and circumvent the HR department. This is harder, but it increases the optionality of your search tremendously.
Regarding: "I fully intend to follow the advice you outlined in your post and comments. I am in the process of creating my own website to display my research work (“making the intangible tangible”). I also plan to join a local CFA society to continue building my professional network."
Good choices all.
Regarding: "Here is my question. What would be the best use of my time while I am studying for the CFA exam(s) and building a name for myself on my own? Many of the entry-level Research Associate openings I find require “1-2 years of related experience”. How can I improve my resume and become more attractive to potential employers down the road? Is there another an area of work I should look into while I am going through the CFA curriculum that can provide me with valuable, relatable experience? How can I get my foot in the door?"
A great series of questions. I was asked in my in-person interview at the Davis Funds: "You don't have any experience at this, so why should I hire you?" I replied, "I don't have paid experience, but I was an analyst intern at a pension consultant, and in graduate school I analzyed well over 50 companies. Would you like to see an example of my research?" We then went to my website, downloaded the analysis I did of Time Warner, and preceded to talk about the work I had done. You have two main jobs right now: one, becoming a good analyst, and two, marketing that you have become a good analyst. A part of this is imagining yourself from the perspective of a future employer. Whatever crazy concerns they may have you need to be able to overcome.
Regarding: "If you’ve made it this far, thank you for reading. I am seeking all of the guidance and direction I can get. I just want to be sure I am on the right track and doing all I can to one day become a research analyst."
If you've made it this far, remember this process takes a LOT of time. These positions are rarefied and you must be good at many things, not just one. Those things: analysis, communications, persistence, knowledge, memory, intuition, lack of bias, and so forth. You've got a lot of work ahead of you.
Regarding: "Thank you again for all you do."
You are welcome!
Yours, in service,
Jason
Such an inspiring guidelines not only for CFA candidates but also for others who are pursuing their desired career. I really enjoyed reading your article.
Thanks for sharing!
Hello Jason,
Its me again and this time its regarding bloomberg terminal usage tips. Could you please suggest any books where I could find bloomberg navigation with examples. Your suggestion matters a lot for me and it has been always.
Thanks in Advance.